Live blog of Janet Yellen’s testimony before Congress

Federal Reserve Chairwoman Janet Yellen made her first public appearance running the central bank before the House Financial Services Committee. The marathon hearing lasted six hours with a few breaks. Read MarketWatch’s Greg Robb live-blog of her appearance.

“Her statement was effectively an expanded version of the last FOMC statement, with no new signals on tapering, thresholds, forward guidance or recent economic data.,” said Jim O’Sullivan, chief U.S. economist at High Frequency Economics.

Hensarling gets right to the heart of the matter, asking Yellen if the Fed will scrap its 6.5% unemployment rate threshold for considering a rate hike. But he loses patience and won’t let Yellen finish her answer.

Yellen says she was surprised by weakness in the last two jobs reports. But you don’t want to be too quick to jump to conclusions, she says. Could be weather. “It is important to take our time to assess what the significance of this is,” Yellen says.

Rep. Randy Neugebauer, a Republican from Texas, asks Yellen the question that irks Republicans the most – is the Fed’s QE policy enabling higher budget deficits.

Yellen tries to take some sting out of this argument. She says the central bank’s bond buying is aimed at spurring growth, a mandate set by Congress. It would hurt the economy if the Fed purposely raised interest rates, she notes.

Yellen says goals of job creation and inflation-fighting will be on equal footing during her tenure at the Fed. Some Republicans in Congress want to strip out the job mandate and have the Fed focus solely on inflation like the European Central Bank.

Yellen strongly opposes a Republican bill that would let the Government Accountability Office audit monetary-policy decisions. It would just allow the GAO to “second guess” Fed rate-policy decisions, Yellen says.

The measure was first proposed by former Rep. Ron Paul, a Republican of Texas in the House and is now backed by his son, Sen. Rand Paul, the Republican of Kentucky.

Yellen says the Fed is paying attention to financial system excess. She says she is not seeing leverage, credit grow to a level where it’s in bubble territory. “There are a few areas where we do have concerns but nothing broadly speaking,” she adds.

In remarks prepared for delivery to the Financial Services panel after Yellen finishes, Kohn says underlying fundamentals “remain favorable for a bit faster growth than we have been accustomed to over most recent years.”

He downplays the last two unemployment reports, saying the monthly data is volatile and might be influenced by the weather.

Stanford University economist John Taylor says that, under his monetary policy rule, the federal funds rate should now be about 1.25%.

“But moving there from where the Fed is now too quickly without sufficient preparation could shock the market and the economy,” he noted, in prepared remarks for the House panel.

Taylor wants Congress to pass legislation that would force the Fed to set a policy rule. he says discretionary monetary policy, along with loose regulatory fiscal policies, are the main cause for the economy’s recent poor performance.